On a long term trend of the S&P, price is up against the top of a channel on the 1D timeframe. A break in this could lead to a completion of the move higher towards the $5,700-800s level where there is another long term trend line. We have to keep in mind that tomorrow's CPI is going to be another catalyst for the stock market.

If CPI comes in hotter, the markets may react negatively and respect the current trend line resistance. If CPI is sticky or edges lower, it may boost price above this line. If the melt up isn't over, we could still see another 3+% to the upside on the SPX500. The market needs a reason to turn lower, and if inflation can't give the bears a green light, it's going to be hard to think of this current price level as the top. -Frank

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🚨This morning's CPI came in lighter than expected

Unemployment claims also came in lower than expected

CPI day was a hit. I WISH my P&L looked like this all the time! +$62k

- Nick

Gold 4H Chart:

Today's CPI report really helped the bulls out - we see price breaking through resistance, and I've trailed stops further into profit in VIP.

- Nick

As market drop, small caps jump higher on cooler CPI data. The RUSSELL is very much interest rate sensitive and has been a sector lagger and is now leading gains over the other indices. One thing to note is that we could be seeing a rotation from mega caps and big names into the other indices that had fallen behind.

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The NASDAQ dropped as much as 2% at the time of writing this marking a long overdue pullback in the tech market. If the rotation out of big tech continues, we might see the NAS100 give back all of its July gains or more. Big names like NVDA, MSFT, AAPL, GOOG and META are all down between 2-3% after this CPI data.
-Frank

Silver, Daily Chart:

Price action is clearly breaking out in recent weeks. We see strong demand for silver leading to fresh higher highs and hower lows.

My entry (which admittedly narrowly missed being stopped out) is now back in the green.

Stops trailed in VIP.

- Nick

As yields take a tumble, bond prices jumped on cooler inflation data. The 10 year treasury note is now considered a strong bullish reading on the EdgeFinder due to the reinforced belief that a rate cut will happen this year, even as soon as September.

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If you're wondering why stocks are down today:

They're not.

Absolutely fascinating day! Market seems to be selling out of megacaps and into the average stock.

- Nick

Retail seems to be heavily long dollar and oil while shorting the US indices except for RUSSELL. Gold remains mixed with DOW and DAX.

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There was a large divergence in COT last week between mega caps and small caps as the DOW, SPX, and NAS all saw buys from smart money while the RUSSELL was one of the largest shorted for the week. I would imagine that this Friday's COT report will be different. We could see selling on the big indices and buying on the small caps.

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This marks the fourth month in a row of declines for CPI in the US. That is the first time it's happened since January of 2023 which suggests the trend could continue lower to the Fed's liking.

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Dow Jones Daily Chart:

We've got liftoff! Resistance breaking to the upside as rate cuts are considered very likely this year.

Inflation cooling, jobs data cooling.

I'm looking for retests. Next week will be big...

- Nick